FAW breaks ground on 5 000 unit-a-year truck plant

Fortune-500 company First Automobile Works (FAW) on Tuesday broke ground on its new truck assembly plant in the Coega industrial development zone (IDZ), just outside Port Elizabeth, with production scheduled to start at the end of 2013.

Production capacity would be 5 000 medium- and heavy-commercial vehicles a year.

The FAW investment was valued at R600-million, with R200-million earmarked for plant construction and equipment, and R400-million to start up and run the facility over the next few years, said FAW group VP Jin Yi.

The trucks were destined for the local market as well as a number of African countries, with FAW sales in Africa currently at roughly 20 000 units a year, said FAW South Africa MD Richard Leiter.

No specific sales data was available for FAW in South Africa.

The Coega plant would not serve as a production base for all of Africa, but only for a number of key markets, such as Angola, Leiter added.

The plant investment would flow from the China-African Development Fund and the Chinese FAW group, through FAW South Africa, which was a joint venture between the Chinese manufacturer and a local company.

FAW South Africa had been selling trucks in South Africa since 1993, and currently had 18 local dealerships.

Yi estimated that the Coega facility would create around 500 permanent plant jobs, with the aim to establish completely knock-down assembly.

“We already have a team here to investigate which parts can be supplied locally.”

Truck production was to be followed by light commercial vehicle and passenger car assembly to follow in a second phase, with the potential here for 30 000 units a year.

Yi said he would prefer to start with construction of the second phase sooner rather than later.

He also noted that the plant was “critical” in FAW’s global strategy. He regarded South Africa, with its good infrastructure network, as “the gate” to the African continent.

The $70-billion FAW sold 2.6-million vehicles worldwide last year, and currently employed 134 000 people.

Yi said FAW would use local companies for the construction of the factory, with “some Chinese engineers” arriving at a later stage to provide training and support to plant employees, who would largely be sourced from the Eastern Cape.

Coega Development Corporation (CDC) chairperson Dr Paul Jourdan said the corporation would have to work with government at all tiers to ensure it created a more competitive environment for FAW in South Africa, as Chinese steel was, for example, the cheapest in the world, versus South African steel, which was some of the most expensive in the world.

CDC CEO Pepi Silinga added that the corporation was in talks with a number of Chinese companies, such as a durable household goods manufacturer, regarding possible investment in the Coega IDZ.

“We are also talking to manufacturers of components in the renewable energy sectors, such as wind and solar power.

“We focus on State-lead foreign direct investment, where companies have been given the okay by the Chinese Ministry of Commerce to go offshore.”